Silver ETFs offer good investment opportunity amidst market volatility
As investors look for diversification and a hedge against economic uncertainty, there has been a noticeable increase in investment in commodities such as Gold and Silver which have always been considered safe-haven assets. Commodities are frequently seen as a hedge against inflation, given their prices are closely tied to general price levels in the economy. They also offer investors a chance to diversify their portfolios, due to their relatively low correlation with equity markets. This trend was evident during the early stages of the COVID-19 pandemic when equity markets declined, yet inflows into prices of precious metals and related instruments surged as investors sought a safe haven. However, of late Silver, frequently overshadowed by its more glamorous counterpart gold, has garnered significant attention for its dual role as both a precious and industrial metal.
What Makes Silver Attractive?
Silver is a popular choice for precious metal investments worldwide. In September 2024, the US Federal Reserve (Fed) cut the benchmark rate by 50 basis points (bps) amid concerns regarding the job market in the US, and ahead of the US presidential elections. More rate cuts are likely to follow in coming months. This scenario boosts Silver's attractiveness, as lower interest rates decrease its opportunity cost. Moreover, geopolitical tensions could also prompt risk-averse investors to turn to safer assets such as Silver.
Source: https://economictimes.indiatimes.com